Chapter 7 is the most common form of bankruptcy filing. The basic process of liquidation involves the appointment of a trustee, collection of debtor’s non-exempt property by the trustee, sale of debtor’s non-exempt property, and distribution of the amounts received from the sale to the creditors. A Chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets. Filing can be done electronically. A Chapter 7 bankruptcy trustee is a person appointed by the U.S. trustee services to administer a bankruptcy case. The trustee reviews the debtor’s bankruptcy petition and verifies the information and calculations using available financial documents and other resources. Immediately after the filing of the bankruptcy petition, a document called “Notice of Commencement of Case” is sent out from the court to all creditors to whom the debtor owes money. All these creditors are stopped by the automatic stay from pursuing the debtor for payment in any way. The debtor should attend a hearing before the Chapter 7 trustee after around thirty days of filing the bankruptcy petition. This is also called a 341(a) meeting. In this meeting, the creditors also participate for assessing the debtor’s financial situation. After investigation and the 341(a) meeting, the trustee files a report with the bankruptcy court. It is the duty of the trustee to sell out all the debtor’s non-exempt properties and distribute its proceeds among creditors.
Lawrence J Warfield
US Bankruptcy Trustee